Legislators put UO on hot seat

Greg Bolt, David Steves

Tuesday

May 25, 2010 at 12:01 AM

SALEM — State legislators demanded better transparency and accounting from the University of Oregon on its $227 million arena project Monday, after a labor group criticized the project’s record-keeping and contracting methods.

The hearing before the state Senate’s Business and Transportation Committee put the spotlight on the UO’s handling of public records requests, which has taken a hit in recent controversies involving the athletic department, most notably the $2.3 million buyout of former Athletic Director Mike Bellotti — also the subject of a separate legislative oversight hearing Monday at the Capitol.

At that hearing, UO President Richard Lariviere was asked once again to explain Bellotti’s costly departure package. The payout was a compromise that gave Bellotti an amount he had some legal claim to, Lariviere said.

“I was not very pleased to have to pay that much,” Lariviere said. “Mr. Bellotti was certainly not pleased to have to accept that much, compared to what he wanted.”

At the arena hearing, John Williams, a research consultant for the Plumbers and Steamfitters Local 290 union, prompted lawmakers to recite a litany of complaints about arena record-keeping.

Williams said he had been told by the UO that certain records did not exist, only to learn later that they did, had not received responses from the UO to many other requests and was unable to get copies of reports the UO is required to keep. The records requests related to the UO’s use, with state approval, of a no-bid contract for the project’s general contractor, project manager and architect, and accounting for “in-kind” donations.

UO officials denied any improprieties and said the project remains on time and on budget. But they acknowledged shortcomings in dealing with public records requests and said they are developing new procedures for that.

The arena project is controversial in part because of its size and the university’s decision to finance it using state-backed bonds. The UO has promised that the $227 million in bonds for construction and land will be repaid using arena and other athletic department revenues and that no public or tuition money will go to the project.

Some legislators were clearly irate at the UO’s failure to provide timely documentation on aspects of the project, including change orders. Change orders document agreed-upon changes to the original construction plans and sometimes involve substantially higher costs than originally estimated.

Rep. Mike Schaufler, a Happy Valley Democrat and a contractor, scolded the UO for failing to produce the records and said it would affect his vote on future bond requests. “My trust here has been broken,” he said.

A labor-dominated group, the Fair Contracting Foundation, has been running a campaign to draw attention to the arena project because of the no-bid contracts. The group opposes no-bid contracts and rented a billboard near the arena to chastise the UO.

The UO received state approval to award no-bid contracts to Portland-based Hoffman Construction and TVA Architects and Minnesota-based Ellerbe Beckett Architects. UO officials said those companies had put a lot of work into the project over several years leading up to its eventual approval, and the university didn’t want to risk losing that investment by putting architecture and general contracting out to bid.

All subcontracts have followed public competitive bidding rules, said Francis Dyke, UO vice president for finance. She said the project so far has awarded $121.4 million in subcontract work, with Oregon firms winning $100 million of that.

Dyke said the UO is looking to improve its response to records requests.

The UO came under fire earlier this year for not responding to media requests for a copy of Bellotti’s athletic director employment contract and discovering later that it never prepared one. Lariviere later reassigned Melinda Grier, the UO’s attorney, to a law school teaching post and said he will not renew her contract when it expires next year.

Grier’s office had substantial responsibility for public records requests at the time. Lariviere has changed that and is creating a separate office to handle the task.

In a separate hearing, Lariviere gave his most candid description to date of the Bellotti controversy.

Lariviere, who took the UO’s top post last summer, said the messy chapter began when he let the popular former football coach know that he did not figure in the UO’s future. Bellotti subsequently left to work as a commentator for the cable sports network ESPN.

“When Mike Bellotti told me about his ESPN opportunity, I encouraged him to take it because I told him it was not going to work for him to continue as the athletic director,” Lariviere told lawmakers. “That’s when he told us we owed him a great deal of money as a result of his employment relationship. A very great deal of money. A pretty surprising number.”

Lariviere on Monday did not disclose a dollar figure.

After hearing Bellotti’s severance request, the president said, he turned to Grier to ask what the UO contract stipulated about Bellotti’s separation.

“And that’s when I discovered there was no contract,” he said.

Lariviere told the panel that he initially thought himself in a position of strength and explained to Bellotti that without a contract, the UO had no future obligation to him.

But then, the former coach revealed to Lariviere what Lariviere termed “the even further surprising fact” that as coach he had worked long periods under a written contract whose provisions had expired and been renewed verbally.

This put Bellotti on more solid legal ground, with a pattern of the UO creating for Bellotti a reasonable assumption that the “rolling five year contracts” that were only verbally worked out for him as football coach would carry over into his new career as athletic director, which began in 2009, Lariviere said.

Lariviere said he asked Grier what the longest work period could have been for Bellotti under a verbal contract and was told three years because contracts longer than that need formal state approval. Bellotti had finished one year’s work as athletic director, leaving the UO exposed to the cost of buying him out for two years, Lariviere said.

At annual AD pay of $675,000, those two years would have cost the UO $1.35 million. After adding to that $900,000 because of a verbal commitment the UO had previously made to Bellotti to shift him from the high-paying coach job to the lower-paying AD job, Lariviere said he concluded that $2.3 million was the maximum amount that the UO could have owed Bellotti. That was, he added, “the maximum amount, reasonably, that a court might find that he was due.”

Lariviere said Bellotti had asked for much more than that, but did not elaborate.

How much Bellotti sought has never been disclosed, although it has been reported previously that Bellotti believed he had been promised the AD job for five years. In that event, a buyout might have netted him another $1.35 million — or $675,000 for each of the two additional years.

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